Commodities On Watch for Hurricane Harvey

The hub of U.S. fuel exports is about to get hit with what could be the worst storm the country has ever seen.

Hurricane Harvey is expected to wreak havoc across south Texas, bringing winds upwards of 125 miles per hour and as much as 35 inches of rain in just a few days.

Areas near the coast are already evacuating. The storm is set to hit later today.

The worst damage could be done in and around Corpus Christi, Texas, which holds entirely too much value for many energy investors’ liking.

The port is a major export hub for not only shale oil, but increasing amounts of LNG.

Both of these fuels are produced from shale plays such as the Eagle Ford and Permian basins in the western part of the state.

Texas also holds the bulk of U.S. refining capacity, about one-third of which is directly in the path of this monster storm.

How Bad Can Harvey Be?

The Gulf Coast has fast become one of the most important hubs in U.S. energy.

It was only last year that the 40-year ban on U.S. oil exports was finally lifted, allowing the country to become a major player in the global oil market.

Since then, the U.S. has become a global swing producer, with more power over the commodity than ever before.

At the same time U.S. shale was pumping record supplies of crude oil, natural gas supplies were surging too.

Earlier this year, we were finally able to start getting these supplies out to market in the form of liquefied natural gas (LNG).

The Sabine Pass became the first commercial LNG export terminal in the lower 48 states, and has already sent tankers across the ocean to the Middle East, Europe, and Australia.

Import terminals at Corpus Christi are being turned into more export terminals right now…

But Hurricane Harvey could put all this work in jeopardy.

If we’re lucky, it will only delay further development of the terminals. If not, there could be more damage to repair that will set these projects back by years.

Another concern is the tankers along the coast, which hold recently refined petroleum products.

These tankers are strong… but not build to withstand a sudden flood of several feet. If the tankers are damaged, supplies could leak, leading to problems even bigger than delayed export terminals.

Despite these threats, oil investors may be in for a pleasant surprise.

Should the storm interfere with oil and gas operations in the area, we may come out of this weekend with lower stockpiles on hand… and higher prices to show for it.

To continue reading about Texas and Hurricane Harvey, click here to read the Wired article.

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